NPC puts income tax law reform on hold

PUBLISHED : Saturday, 23 April, 2011, 12:00am
UPDATED : Saturday, 23 April, 2011, 12:00am


Beijing's controversial draft amendment to the personal income tax law has been put on hold by lawmakers on the National People's Congress Standing Committee after their three-day session ended yesterday.

NPC chairman Wu Bangguo said lawmakers raised various comments and suggestions on the draft amendment while agreeing with its overall direction.

But the draft amendment will have to be published in full to solicit public feedback. The NPC will approve the amendment as soon as possible once it is revised, Wu pledged. Century Weekly reported on its website that the NPC Standing Committee decided to delay a vote on the law after an initial review., a news portal, said Jia Kang, head of a research institute affiliated with the Ministry of Finance, confirmed another round of legislative debate over the draft amendment was scheduled for June and said it was hard to predict when the amendment would win final approval.

The draft amendment was intended to increase tax cuts for the poor, but this week the mainland media has been filled with complaints about the alleged shortcomings of the draft amendment.

Many said the tax threshold should be raised to 5,000 yuan (HK$5,958.37) a month. A survey showed more than 88 per cent of respondents hoped the threshold would be raised to 'above 5,000 yuan'.

Official media reported lawmakers had divergent opinions on how to protect poor households, how to take inflation into account, how to tax the rich, especially their investment earnings, how to deliver research and innovation incentives, and how to obtain and verify information about an individual's tax standing.

Xinhua said members of the public had also called for a broad overhaul of the mainland's tax system.

In the present version of the draft amendment, the State Council proposes raising the income threshold for personal tax payments to 3,000 yuan a month from 2,000 yuan.

With inflation on the rise and poorer residents' share of overall national income shrinking, Premier Wen Jiabao pledged this year that the government would implement personal income tax cuts.

The mainland's personal income tax revenues have ballooned in the past decade, hitting 483.7 billion yuan last year, up from 41.4 billion yuan in 1999, partly thanks to enhanced tax collection. In the first quarter of 2011, personal income tax revenues totalled 203.85 billion yuan, a rise of 37 per cent from a year earlier. Meanwhile, the economy grew 9.7 per cent and per capita urban disposable incomes rose 7.1 per cent.

The mainland has amended its personal income tax law twice, doubling the threshold from 800 yuan a month to 1,600 yuan in 2006, and raising it to 2,000 yuan in 2008.

Additional reporting by Laura Zhou

Less tax, please

This is the proportion of mainlanders who want the income tax threshold raised above 5,000 yuan per month: 88%